Ilta 2005 successful technology begins outside the computer room by dave cunningham and alan nathanson - aug 2005

August 2005 © 2005 Baker Robbins & Company

Successful Technology Begins Outside the Computer Room…Integrating Successful IT with its purpose

Dave Cunningham, ShareholderAlan Nathanson, Shareholder

Baker Robbins & Company

August 25, 2005


Today’s Agenda

Management/IT disconnects

Top 10 IT Success Drivers

Defining IT value

Setting the agenda


Management / IT Disconnects


Legal IT Crossroads

Disaffection with IT– Rapid evolution of technology trend– Platform “pacing” problems– Awareness of outsourcing trends– Profitability pressures

Renewed interest in IT– Organizational size and complexity– Competitive pressures– Regulatory influences


Top 10 IT Success Drivers


Top 10 IT Success Drivers …

Derived from “The New CIO Leader”


1. Leading & Managing


IT Leadership vs. Management

Two entirely different concepts …

Leadership qualities …– Vision– Communication & personality– Relationship building

IT has a seat at the senior management table

Can influence the firm’s style – (three types) …– Cost side focus– Economy driven– Driven by thoughtful investment

Can sell innovation and new ideas

Does NOT emphasize IT management

Leadership

Identifying change and influencing others to change

Management

Execution and control

Leadership

Identifying change and influencing others to change

Management

Execution and control

1. Leading & Managing


Grouping the Remaining 9 Drivers …

Demand Side IT


2. Understanding the Business Environment …


The Business & Practice of Law

The “why” of IT

Requires grasp of fundamental legal practice

Beyond basics - not as straightforward as we think

Focal points …– Law firm competitive landscape– Business fundamentals– Important players in your firm– Trends affecting the legal practice



Law Firm Competitive Landscape

How is your firm branded? What’s it best known for? Who are the firm’s 10 largest competitors? Why?

How is the firm competitively different?

What client industries are predominant within the firm?

How does the firm’s Marketing function work?

What types of fee arrangements (beyond simple billable hour) does the firm commonly entertain?

How does practice area cross-selling occur?



Legal Business Fundamentals

How is your firm “really” governed?

Which committees are important to IT?

What’s the firm’s partner compensation model?

How is origination credit calculated? Allocated?

How granular are the firm’s profitability measures?

What’s the firm’s strategic plan for growth?

How are office openings & firm mergers considered?



Important Players in Your Firm

Practice groups– Practice group heads– Key rainmakers– PSLs & KM managers

Important clients

Client industries

Senior management– Firm wide Managing Partner or Chairman - first– Executive & Marketing Directors – second– Finance, HR, Recruiting, Facilities Directors - third



Important Trends Affecting Legal Practice

Mergers & consolidation

Regulatory compliance & litigation readiness

Profitability reporting & strategic information delivery

Lock step compensation model

Knowledge Management concept and reality

Strategic sourcing

Matter-centric service life cycle



3. Creating a Vision for IT-Based Success …


What constitutes visionary IT activity?

Rarely involves:– infrastructure (pipes & plumbing)– “must have” baseline investments (e.g., laptops, Word)– associated user support services

Ideally involves:– New or further growth of a value proposition or ROI;– Material cost savings over a pre-existing expense; or– A qualitative (i.e., quality) improvement that can be

measured



Examples of Visionary Efforts …

Global firm “Follow the Sun” transaction documents (2001)

Integrated practice area portal (2002)

Large firm move to off-site data center & administrative services (2003)

Record retention rules integration with DMS (2004)

IP litigation defendant claim call center (2005)


Modest VisionsCan Florish HereModest Visions

Can Florish HereGreat VisionsCan Die HereGreat VisionsCan Die Here

Emerging Technology Hype Cycle …

Source: The Gartner Group

Visibility

MaturityTechnolog

yTrigger

Peak ofInflated

Expectations

Trough ofDisillusionment

Slope ofEnlightenme

nt

Plateau ofMaturity


Popular Theory: Pick Two … Mitigating the Hype


Faster

Better Cheaper


Budget Accompanying Impact Statements …

Description

Client Impact

Practice Group Impact

Cycle Time Impact

P&L Impact

Ranking


Initiative #1

Initiative #2

Initiative #3

Initiative #4


4. Shaping IT Constituent Expectations …


Translating Business Strategy Into IT Strategy

IT initiative impact statements aren’t sufficient

Initiatives must be auditably tied to business strategies

Process consists of 2 steps

Step #1:– Define how (in actionable terms) a business goal will be fulfilled

based upon no more than six (6) business maxims. For example:– Pricing of legal services & economies of scale (e.g., best practices)

– Value differentiation & Client intimacy

– Flexibility & agility

– Business growth (client industries, geographies, existing vs. new client base)

– Human resource requirements

– Management requirements





Translating Business Strategy Into IT Strategy

Step #2:– For each business maxim, draft IT maxims that identify

(by way of example):

1. New or modified technologies that the business goal requires

2. How related information is to be gathered, stored, accessed and used

3. IT architecture and standards requirements tied to the business goal

4. Telecommunications requirements tied to the business goal

5. How users and clients are to be supported

6. IT asset requirements and costs

7. How IT contribution to business goal achievement may be measuredSource: The Gartner Group


IT Maxim Examples …

IT will be used to reduce costs through elimination of duplication of effort

New matter intake workflow must ensure that risk management steps have been taken

We must centralize document management libraries across offices to ensure distance collaboration

Mobile users must have the same access to information that they have at the desktop



Rules for IT Maxim Development …

Develop IT maxims in collaboration with business stakeholders – not within the IT organization

IT maxims should always be:– Formulated using explanatory sentences– Actionable (as opposed to theoretical)– Realistic, given culture and existing IT baseline– Capable of some form of measurement




5. Creating Effective Governance …


What Is Governance Anyway?

The process of determining how to allocate IT dollars and resources:

– to the right business needs,– in consideration of the right priorities, and– having accounted for material risks and rewards.

Not synonymous with IT management

Requires participation by business stakeholders

IT-only or Business Leader-only participation doesn’t work

Role traditionally (usually incorrectly) filled by a Technology Committee



Signs of Good IT Governance …

Not all business objectives are considered equally important; energies in fewer more important areas

Little drastic change in governance philosophy across plan years

Formal process for handling inevitable exceptions

Formal communication methods among Governance body members

Very senior management participation is evident



A Well Rounded Governance Council …

Chief Information Officer (chair)

Managing Partner or Chairman

Executive Director

Finance Director

Marketing Director

Practice Area Chairs (or equivalent)

Heads of KM, RM, and IT lead managers (varies)



6. Weaving Business & IT Strategy Together …


How the Weaving Works …Governance body:

1. Defines initiatives with an associated business case

2. Evaluates initiatives using objective criteria based upon:• Business impact

• Financial impact

• Risk

• Architectural fit

• Delivery of benefits

3. Compiles an overall IT Portfolio across initiatives

4. Prioritizes initiatives and balances the portfolio (considerate of knockout factors)

5. Matching initiatives to resources

6. Managing the portfolio actively, following up on costs and benefits



IT Portfolio Represents:

Architecture, platforms & applications having the highest business value across the firm

Also takes into account IT-related Opportunities (ITOs) with acceptable risk

Focal point for halting low value, conflicting & redundant effort

Baseline for all IT action, subject to formally recognized changing conditions



Sources of Portfolio Funding Include …

Firm level funding (typical)

Practice Group funding (presumes PG P&L - rare)

IT funding with internal chargeback (rare)

Client funding (e.g., expense chargeback or case specific litigation support) (decreasing in popularity)

Consortium funding (e.g., 1992 financial consortium)

Funding through sale of IT services (rare)




Demand Side IT



Demand Side IT

Supply Side IT


7. Building the Right IT Organization …


Repurposing Traditional IT …

IT’s charter is to deliver promises (IT Portfolio) made on the demand side

Through successful delivery, IT creates demand-side credibility by:

– Doing well what it is supposed to do– Measuring its progress and contribution to business

goals– Communicating its progress



Problems With Many IT Shops …

Larger firms have both central & decentralized functions with – at times – competing interests

Organization is often based on functional silos

IT initiatives inevitably involve effort across multiple silos, creating inefficiencies in the IT delivery process

Consequently, users suffer

Occasional tinkering with org structure doesn’t help



New IT Organization Trends …

Elimination of organization by platform, skill set, etc.

Process-based work – organizing IT resources around cradle-to-grave business and IT processes

Adoption of strategic sourcing model …– Not to save money– Rather, to offload select IT effort of a low strategic focus– Helps IT to be more agile & responsive to the firm

Embed a portion of remaining IT into the Practice Groups

Remainder of IT assumes the following roles:– Participation in Demand-Side IT functions– Management of IT processes– Liaison with sourcing and embedded resources– Primary focus on business and practice innovation



Illustration of New IT Model …


BusinessInnovation

DeliveringChange

SupportingInfrastructure

Outsourced to External Service

Providers

Embedded inthe Practice

Groups

Traditional IT Responsibilities



8. Developing a High Performance IT Team …


IT Team Performance Requires …

The right competencies, with new emphasis on:– Business needs– Leadership– Process Management

Formal training in support of the above

New tools for IT involving:– Methodology– IT process automation– Documentation



New IT Tool – IT Infrastructure Library (ITIL)

“Best Practice” guidance for IT service management

Specifically, a framework for:– Structured IT process definition (wide ranging)– Application and security management– Improved communication both within IT and user

community– Potential IT operational cost reduction– Improved alignment with Demand-Side IT activities



ITIL Framework



9. Managing IT Related Risks …


Wide Ranging Risk Focus …

Virus, spyware, spam, pop-up, etc.

Denial of service

Theft of data

Web access unrelated to business

Violation of attorney privilege

Business continuity & disaster recovery

Regulatory Compliance (HIPAA, SOX, DSBNA, etc.)

Litigation readiness



IT Role in Law Firm Risk Management …

Manage “above the line” IT risk-related efforts

Incorporate ITIL Security Management best practices

Address “below the line” risks through:– Establishment of a risk council or committee (including the firm’s

litigation, RM and DR functions as well as in-house counsel if existent)

– Develop formal security policy (based on COBIT / ISO17799)– Prepare and implement a comprehensive record retention policy

Prepare and execute with employees a firm policy binder covering their role in all risk-related areas



10. Communicating IT Performance …


Premise for Understanding IT Performance

Scenario #1:

A senior partner in the firm asks:

“What business value are we getting from IT?”

What is your response?

• Do you know the answer to her question from an organizational and investment dollar perspective?

• Are you prepared to articulate that answer in a meaningful way?



Premise for Understanding IT Performance

Scenario #2:

Your IT Governance Council asks:

“Did we achieve the value we expected from project X?”

What is your response?

• Have you established reasonable metrics for project X?

• Have those metrics been useful in assessing the project?

• Are governance decisions imminent as a result of the metrics?

• Are you prepared to articulate the above in a useful way?



Perception vs. Reality of Value Two stories about value

Who has a better grasp on value:– The motorist or the rancher?– The engineer or the company?

The value of an IT-based initiative can only be effectively measured if:1. The business case for its IT Portfolio inclusion agreed to the

value measurements “up front”

2. The measurements are actually taken and assessed

3. A feedback loop is created for the IT Governance Council


No

ambiguity


Perspectives on Value & Benefit …

Measurements must be practical

Plain and simply communication along three lines:– Technical benefit (in pedestrian terms)– Business benefit (top or bottom line oriented)– Partner benefit (client business volume, profit per

partner, etc.)



IT Performance Dashboard Concept …

Two sets of IT performance indicators or scorecards

Vetted by IT Governance Council

Type 1: IT indicators might include:– Basic operational performance statistics– System availability measures– IT support performance indicators– Service level effectiveness– Delivered projects index (on-time, on-budget)– IT cost ratios (function of P&L)

Type 2: Business value indicators (tied to Business Maxims)



Setting the IT Agenda


Summary of Action Items to Consider …

Tune the focus of your IT leadership (vs. management)

Take a fresh pass at understanding the firm’s business

Initiate Business & IT maxim preparation efforts

Identify IT initiatives where Business & IT maxims converge

Recast your firm’s governance model

Prepare and evolve a living IT Portfolio

Repurpose the IT organization with above in mind

Implement ITIL (or something like it)

Extend risk management outside the IT boundary

Measure and communicate the value of IT on a perpetual basis


Questions